Summary
The Ninth Circuit affirmed the district court’s order certifying a California consumer class action alleging that Johnson & Johnson Consumer Inc. deceptively marketed Neutrogena moisturizer as “oil-free.” The court held that the district court did not abuse its discretion in relying at the class-certification stage on an unexecuted but sufficiently developed damages model, and that materiality and reliance could be established through common proof. The court also concluded that the proposed damages model was sufficiently connected to the plaintiff’s theory of overpayment under California consumer-protection law.
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Practice areas
Questions Presented
- Whether the district court abused its discretion by relying at the class-certification stage on an unexecuted proposed damages model that had not yet been fully developed or tested.
- Whether the proposed damages model matched the plaintiffs' theory of harm under Comcast Corp. v. Behrend and could measure damages on a classwide basis.
- Whether materiality and reliance under California's consumer-protection statutes were susceptible to common proof such that common questions predominated under Federal Rule of Civil Procedure 23(b)(3).
- Whether repeat purchases, positive customer reviews, and differing possible understandings of the term "oil-free" rebutted the inference of reliance or defeated predominance.
Holdings
- A district court may rely on a reliable but not-yet-executed damages model to determine whether damages are capable of classwide measurement at the class-certification stage. The district court did not abuse its discretion by considering Dr. Roberts's proposed model despite the fact that the survey questions had not been finalized and the survey had not been executed.
- The district court did not abuse its discretion in finding that the proposed damages model matched Noohi's theory of harm and could measure damages on a classwide basis.
- Materiality, and therefore an inference of reliance, may be established under California's consumer-protection statutes using an objective reasonable-consumer standard and may be proven through common evidence in this case.
- JJCI did not rebut the inference of reliance or establish that common issues failed to predominate by pointing to repeat purchasers, positive customer reviews, or possible differences in consumers' understanding of oil-free.
Key quotations
“class action plaintiffs may rely on a reliable though not-yet-executed damages model to demonstrate that damages are susceptible to common proof so long as the district court finds that the model is reliable and, if applied to the proposed class, will be able to calculate damages in a manner common to the class at trial.” (at 5)
“there is no categorical prohibition on a district court relying on an unexecuted damages model to certify a class.” (at 11)
“Because materiality (and, hence, in this case reliance) may be proved by reference to an objective, reasonable consumer standard, reliance under the CLRA is generally susceptible to common proof.” (at 20)
“But a showing that a statement was material to different class members in different ways does not.” (at 24)
“For the foregoing reasons, we affirm the district court’s grant of class certification. AFFIRMED.” (at 27)
Factual background
Narguess Noohi purchased Neutrogena Oil-Free Moisture for Sensitive Skin because she wanted an oil-free moisturizer. She alleged that the product nevertheless contained oils or oil-based ingredients, including ethylhexyl palmitate and soybean sterols, and that she would not have purchased it had she known that fact. Her putative class action challenged the product's labeling under California consumer-protection statutes, and the district court certified a class of California purchasers.
Procedural history
Noohi sued Johnson & Johnson Consumer Inc. under California's False Advertising Law, Unfair Competition Law, Consumers Legal Remedies Act, and common-law fraud theories based on the labeling of Neutrogena Oil-Free Moisture for Sensitive Skin. The Central District of California certified a class of California purchasers under Federal Rule of Civil Procedure 23(b)(2) and (b)(3). The Ninth Circuit granted permission for an interlocutory appeal and affirmed the class-certification order.